govern the scope and type of information received during the interview. There are, however, several points which should be brought out in the interview. Some of these are of basic importance; others merely serve to throw additional light upon future credit possibilities of the applicant. By tactful questioning concerning market conditions and the trend of his line, it will soon be apparent whether the applicant is shrewd or uninformed. Shrewdness does not insure honesty, but a clever buyer, by wise selection of goods, insures that they will be salable and thus increases his power to pay his bills at maturity. Facts pertaining to the capital strength, organization, present conditions and the outlook of the applicant's business are often secured, unsolicited, during the personal interview. If questions have arisen concerning the applicant's credit possibilities, either in the financial statement, through references, or from statements of salesmen, the personal interview affords an excellent opportunity for clearing up such situations. Such information can readily be checked elsewhere, and the frankness with which the prospective customer talks over these difficulties serves as an excellent measure of the character risk involved in extending him credit. The following questions are suggested as the type of definite information which should be secured, directly or indirectly, during the personal interview. I. In what kind of business are you engaged? Where located? 2. How long have you been at the present location? 3. In what kind of business were you formerly engaged? Where? 4. How long have you been in this particular line of business? 5. Who are some of your older creditors? 6. Do you own your business property? If not, what rent do you pay? 7. How much have you invested in your business? 8. If you have borrowed money to cover running expenses, how much? 9. What is the average amount of stock you keep on hand? 10. How much insurance do you carry? 11. What are your overhead expenses? 12. Have you any income outside your business? 13. From what source is money coming to pay for goods? 14. On what terms do you sell? 15. Where have you been buying heretofore? 16. What are your monthly sales? 17. What is the estimated amount of credit desired? Advantages of the Personal Interview. The personal interview usually proves an advantage to debtor and creditor alike. The man seeking credit should appreciate the personal interchange of confidence with the house with which he wishes to deal, because in that confidence he has an opportunity to show all his points of strength, to indicate that he possesses character, ability, and capacity, and to impress the credit manager with his own confidence in his enterprise. The credit man, on the other hand, can see the type of man in whose business venture he is joining as a sort of partner and by establishing a proper basis for the exchange of information, one with the other, can put himself in a position to aid materially in the success of the venture. Thus he develops a satisfactory account for his firm and helps to strengthen the business fabric of the community in general. The credit man needs to know what the customer's weaknesses are, and if possible to get close enough to him to avoid the dangers which these weaknesses bring, and to help him become a better and larger customer by developing the stronger characteristics which are manifest. This is constructive credit work. There is an increasing number of men who are recognizing and acting upon this new principle. The initial granting of credit is not the only occasion for the personal interview. When the debtor becomes delinquent in payments, when his business is jeopardized through poor management, or unforeseen misfortune, the personal interview plays one of its most important roles. Here it behooves the credit manager to leave his desk, at times, and survey the difficulty at the field of action, to talk the situation over frankly with the debtor and perhaps with other of his creditors, and to then come to some decision as to settlement. It is true that financial dealings play a great part in the final decision, but if the character of the debtor has proved such as to warrant confidence, he is usually allowed to work out his own salvation with the guidance and confidences of his crediting houses. J. Pierpont Morgan had said that character is before money or property or anything else; money cannot buy it. Surely, if character plays such a vast role in modern commerce, the personal interview and further personal contacts are the first-hand methods for measuring it. Many credit managers find it desirable to visit most of their customers at regular intervals. This is not primarily a visit for credit purposes though much valuable information is gathered. Supplementary data on all of the points indicated upon which information was to be sought in the first interview is gathered. The same questions are important. New developments are noted and a better understanding of the credit risk is secured. REFERENCES Beckman, Theodore N. Credits and Collections, pp. 188-190. Ettinger, Richard P. and Golieb, David E. Credits and Collections, pp. 178-180. Prudden, Russell F. The Bank Credit Investigator, Chaps. IX-XI. New York, Bankers Pub. Co., 1922. CHAPTER VIII MERCANTILE AGENCIES, GENERAL AND Nature of Demand.-Credit information serves as the basis upon which credit transactions take place. Any machinery by means of which this information can be secured more easily and its proper dissemination facilitated is a desirable addition to the economic structure. If large numbers of firms and business organizations find the information useful, it is more profitable to develop a central source where all can go and get the information they desire. This necessity for the accumulation of facts concerning credit risks has led to the development of the agency system in the United States. The mercantile agencies are of two distinct classes, the general agencies and the special agencies. The general agencies are vastly larger in scope than are the special agencies, gathering, as they do, information regarding all types of mercantile businesses. Their goal is the inclusion of every business firm, small or large, in their ratings. On the contrary, the special agencies limit themselves to particular trades or particular locations, believing that they can render better service by limiting the field of their activities. Purposes. The two most notable general agencies today are the Bradstreet Company and R. G. Dun and Company. These organizations have grown steadily and their service has grown broader and more comprehensive, always attempting to meet the needs of a rapidly growing economic community, which is more complex than it has been in the past and which constantly demands more and more of all those organizations which seek to work as a part of it. In the general operation of these agencies a system is provided for acquiring a knowledge of the mercantile condition of traders and for conveying that knowledge to others who seek it. Business organizations of the United States realize that each man and each firm develops a reputation, and it is this reputation which the mercantile agency endeavors to estimate fairly and to place the information upon which such estimates are made at the disposal of its patrons. Three essential features are implied in the compilation and dissemination of such information: careful investigation, frank cooperation and business honor. The agency assumes the position of a confidential agent of each subscriber, keeping its transactions in confidence, never revealing the source of an inquiry. It does not and can not decide the credit limit of particular customers, but it serves to furnish information upon which the credit manager himself can make the decision. The fundamental theory of trade investigation upon which the mercantile agencies base their work, may best be emphasized by two statements, one issued by an authority of the Bradstreet Company, one from the R. G. Dun and Company agency: A well managed credit amounts to ten fold the funds of a merchant: And he gains as much by his credit as if he had ten times as much money. Credit, therefore, is the greatest wealth to every one who carries on commerce. The mercantile agency has as its object the obtaining and communication of information relating to the amount of credit which one party to a credit transaction may prudently give and the other party may prudently accept. That if a man buys or sells goods, his ability to carry out his contracts is a proper subject for inquiry, and that the trader who does not or neglects to respond to a request for such a statement, |